Miami is the city where rents increased the most in the US: the value in the city rose by 41%.
Another month, another record for U.S. single-family rents, which rose by 14% year over year in April, marking the 13th period of record annual gains.
Supply shortages and a strong labor market are driving prices higher, according to CoreLogic, a real estate data provider.
“We expect single-family rental growth to continue to increase at a rapid pace through 2022”, said Molly Boesel, chief economist at CoreLogic, in a statement.
Among the major metropolitan areas tracked by the company, Miami posted the biggest gain: nearly 41%. That's roughly seven times the city's 5.6% April 2021 growth rate. Meanwhile, East Coast metro areas, including New York City, Philadelphia and Washington, D.C., posted some of the lowest increases.
Elsewhere, U.S. existing home sales fell to their lowest level in two years in May, as prices rose to a record high -surpassing the $400,000 mark for the first time- while mortgage rates increased, pushing first-time buyers out of the market.
Despite the fourth consecutive monthly drop in sales and declining affordability, the National Association of Realtors (NAR) reported Tuesday that the housing market remains quite hot, as properties remained on the market for a record 16 days last month.
“The market is far from weak,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. “The full impact of monetary tightening is likely to take some time to manifest itself.”
Existing home sales fell by 3.4% to a seasonally adjusted annual rate of 5.41 million units last month, the lowest level since June 2020, when sales were recovering from the drop caused by COVID-19 confinements. Sales rose in the Northeast, but declined in the Midwest, West and South.
Economists polled by Reuters had forecast that sales would decline at a pace of 5.4 million units. Home resales, which account for the bulk of U.S. home sales, fell by 8.6% on a year-over-year basis.
May sales were mostly closings on contracts signed a month or two ago, before mortgage rates began to accelerate amid rising inflation expectations and aggressive interest rate hikes by the Federal Reserve.
The 30-year fixed-rate mortgage rose by 55 basis points last week to a 13 1/2-year average of 5.78%, according to data from mortgage finance agency Freddie Mac. This is the largest one-week rise since 1987. The rate has risen by more than 250 basis points since January.
The report added data on housing starts, building permits and homebuilder sentiment that suggests the market was losing velocity under the weight of higher borrowing costs.
A zero-value for the monthly index has been associated with the national economy expanding at its historical pace of growth. Fears of a recession have been on the rise following the Federal Reserve's decision last week to raise its interest rate by three-quarters of a percentage point, its largest increase since 1994.
The housing market is the sector most sensitive to interest rates. Its slowdown could help bring housing supply and demand back into alignment and lower prices.
The median existing home price rose by 15.8% from a year earlier to an all-time high of $407,600 in May. It was the first time it exceeded the $400,000 level.
With demand cooling, monthly supply is likely to continue improving.
